Hey, I’m Steven and this is Solving The Money Problem.
If you’re new to the channel--where have you been?
The party started weeks ago!
For the rest of you, welcome back.
This *is* moving fast.
(Are we still seeing other people?)
As some of you know, Today, Tesla makes up over 80% of my stock portfolio.
Just to be clear, I said *stock* portfolio.
I have other assets too, like apartments.
And my charm.
Most of the remaining 20% of my stock portfolio is made up of just two other companies.
So, in this video I reveal my 3 stock portfolio and explain why if I had to build a stock
portfolio from scratch today, it would be made only of these 3 companies
I’ve said in the past:
[I’m not a believer in diversification for its own sake.
If you have no idea what you're doing, then sure, diversify.
If your petrified of risk, sure, diversify.
If you have mouths to feed, then sure, diversify.
I don’t.
And I’d much rather be making investment decisions from a place of confidence, than
uncertainty.]
So keep that in mind as you watch this video.
These 3 companies share many of the same fundamental strengths including:
Scientifically literate founders A clear, disruptive vision for the future
Aggressive scaling No fear of failure
Frugality and resourcefulness Exponential tailwinds
Massive data
Let’s look at each of these strengths in depth.
Wait, what’s that?
You want to know the companies now?
Ok, f**k it.
Amazon, Alphabet (well, Google) and Tesla.
Let’s talk about why.
Scientifically literate founders
eff Bezos, Larry Page, Sergey Brin and Elon Musk are gigantic nerds.
Bezos is a Star Trek tragic.
Musk is a memelord and I mean, did you not see Google Glass?
These guys are total geeks and this matters.
Bezos has a degree in computer science and electrical engineering.
Page and Brin were enrolled in a computer science PhD when they founded Google.
Musk has degrees in physics and economics and abandoned a PhD to found his first internet
company, Zip2.
These guys understand the world from the atoms up giving them enormous advantages over those
who do not.
With a scientific, evidence-based world view, an intimate understanding of the exponential
progress of technology and IQs a few standard deviations above average, these men are dangerously
smart, see MUCH further than you and know how to get there.
A clear, disruptive vision for the future
It takes some combination of genius and madness to have the kind of disruptive vision for
the future that Amazon, Google and Tesla share.
Each of them knows this is a long game.
Almost every time one of these companies has declared its intentions to pursue an opportunity,
they’ve been ridiculed and dismissed as crazy.
Why?
Because those who dismiss them lack information, vision, intellect or a combination of all
three.
I’m not judging here, it’s just true.
If an engineer with a 165 IQ says “This is possible.
I’m going to do it.”, it may be hard to believe if you’re an average joe who doesn’t
understand where the 13.7 billion year old hydrogen atoms in their bodies came from.
Smart people who know science can see WAY further than the rest of us.
It’s easy to dismiss them as crazy and their ideas as ridiculous when you can’t see as
far or clearly as them.
This actually matters.
The next time you hear an analyst share an opinion about the future, just remember, they
might think the earth is 6000 years old, too.
Aggressive scaling
Imagine you’re Jeff or Elon or Sergey or Larry and using that gigantic brain of yours,
you identify an opportunity.
The opportunity is enormous and the time is ripe.
To make the most of it you MUST scale as fast as possible.
Achieving scale is everything.
If you’re scaling as fast as you can, you’re unlikely to banking billions in profit.
If you are, you’re probably scaling too slow.
Most “analysts” tend to be extremely short sighted.
These are the folks you hear crying in the corner when Tesla reports a $386 million loss
for the year while almost doubling revenue, massively increasing production capacity charging
infrastructure.
Amazon, Google and Tesla don’t care what Wall St thinks.
They care about seizing the opportunity.
Wall St can sook as much it wants to.
“Don’t get it?
Not our problem.”
No fear of failure
Fear of failure cripples as many individuals as it does companies.
Giving zero f**cks is an excellent strategy for winning at life, and at business.
But it’s difficult for most to do.
It takes a lot of courage and most people beset with a crippling fear of failure.
I could go deep into some Tony Robbins s**t here but I’ll save that for another time.
The willingness to experiment, to mess up, to take a loss, to embarrass yourself, to
dust yourself off and go again, to be bold and innovate, to take risks and know that
you’ll either learn or succeed -- this is what drives disruption and sustained growth.
There aren’t many companies with bigger balls than Amazon, Google and Tesla.
That’t why they see continued growth.
Frugality and resourcefulness
Every woman I’ve ever dated can tell you one thing about me.
I’m frugal as f**k.
I picture my life like a gigantic ship on the ocean.
Spending money on dumb s**t is like drilling holes in the ship’s hull.
Keeping afloat is hard when you’re springing leaks everywhere.
To provide some context, in my 20s I earned a pretty average income.
While I was investing aggressively in real estate, I kept my living costs below the poverty
line while living in one of the world’s most expensive cities -- Sydney.
I slept on friend’s couches, never ate at restaurants and cycled everywhere, completely
eliminating or drastically reducing my expenses.
As a result, that insane frugality helped me scale my real estate portfolio quickly
and build a great foundation.
Let’s watch this 1997 footage of Amazon founder Jeff Bezos.
This is the kind of person you want running a growth company.
In May 2019, Elon Musk emailed Tesla employees, stating:
“it is extremely important that we examine every expenditure at Tesla no matter how small,
and be sure that it is critical.
When making hundreds of thousands of cars, battery packs and solar systems, even a ten
cent savings could be worth over $50,000 a year.”
He continued:
“That is why, going forward, all expenses of any kind anywhere in the world, including
parts, salary, travel expenses, rent, literally every payment that leaves our bank account
must be reviewed, confirmed as critical and the top of every page of outgoing payments
signed by our CFO.
I will personally review and sign every 10th page.“
This extreme cost cutting at Tesla delivered a surprise profit in Q3 2019, blowing wall
st away and sending the stock on a tear.
Leaders who manage resources ruthlessly can do a lot with a little.
This is the kind of extreme frugality and resourcefulness you want in growth company.
Exponential tailwinds
Another common thread between Amazon, Google and Tesla is that many of their core products
and technologies benefit from declining cost curves and exponential growth.
Human beings don’t intuitively understand exponential growth.
Our ancestors evolved in a linear, relatively unchanging world and as a result, our brains
simply suck at understanding what’s happening right now.
Here’s an example.
If you take 30 linear steps, each 1 meter in length, you are 30 meters away from where
you started.
Question.
If you take 30 exponential steps (meaning you double the length each step so 1m, 2m,
4m, 8m) how many meters are you from your starting point after 30 steps?
No really.
Give yourself a few seconds, pause the video if you want and take your best guess.
How many meters do you cover with 30 exponential steps?
Have you got your number?
Great.
I’m about to tell you the answer.
Ready?
You walk 536,870,912 meters -- enough to circle the earth 13 times.
These kind of non-intuitive answers are why scientific literacy is so important.
It allows you to reach the CORRECT conclusion instead of the INTUITIVE conclusion.
When people say things like “Electric vehicles are a joke, they’re only 1% of the global
market”or “Google will never make money from YouTube” that’s their ancient brain
talking.
It has no place in this new, exponential world.
The cost of lithium ion batteries is riding a declining cost curve.
Internet usage is growing exponentially.
Computing power is growing exponentially.
The world’s information is growing exponentially.
Tesla’s self driving data lead is growing exponentially.
I could go on.
Massive data
Data is the asset.
One more time.
DATA is the asset.
It’s hard to stress just how important data is to these companies and yet it’s an often
overlooked asset.
For Amazon and Google, customer data helps them recommend products or serve you relevant
ads.
What they know about you is everything.
I mean, dude.
How many of you are watching this video because YouTube recommend it to you?
And since you’re still watching you probably like it.
Which means...yep.
The YouTube AI KNEW you would like this video.
Data matters.
Tesla is evolving into a serious software company with Full Self Driving as their flagship
product.
The self driving AI is being trained via deep learning.
These neural nets are being fed MOUNTAINS of data to improve.
That’s how deep learning works.
This progress is deceptive at first but it’s following an exponential curve.
Just as it was easy to imagine Amazon becoming nothing more than a big book store or Google
remaining just a search engine, it’s easy to overlook how valuable data is and how it can transform a company.
Amazon, Google and Tesla are 3 companies who push aside intuition and actually look at
the facts.
This is rare.
As usual, I have another 20 reasons I could share with you guys (like Google owning a
massive slice of SpaceX).
But these are SOME of the reasons why Amazon, Google and Tesla combined make up 97% of my
stock portfolio.
They’re scientifically literate, so they see further.
Their vision is not of what is, but what can be.
They prioritise growth over appeasing wall st.
They give zero f**ks about failure, knowing it’s an inevitable part of disruptive innovation.
They’re frugal and ruthlessly resourceful.
They’re riding exponential tailwinds and they have enormously more data than everyone
else.
Now guys, this isn’t investment advice.
It’s just a peek into my thinking and my reasoning.
I don’t see myself as a stock investor.
I’m just an opportunistic investor.
Since 1993, I’ve had regular internet access and I’ve followed the story of Amazon and
Google since day 1.
I didn’t go out looking for stocks to invest in.
This is important.
However, after retaining a curious interest in the growth stories of stories of Amazon,
Google and later, Tesla, and then taking a more discerning look at each as I became more
focused on investment and financial independence, I realised that their success was no accident,
that they were operating very differently to most other companies, that NO ONE was seeing
their true potential and that their results would reflect this.
That’s why today Amazon, Google and Tesla are all I need and why tomorrow, if I started
a stock portfolio from scratch, they’d be the only 3 companies I’d want.
Thanks so much for watching.
Share your thoughts in the comments below.
Any holes in my thinking?
What’s in your stock portfolio?
And if you have any ideas for future videos, let me know.
I read ALL your comments.
p.s.
If you’re still watching, you’re AWESOME.
This channel has kind of blown up since it launched and I’m working on creating the
best possible content for you guys, but it takes time.
Consider supporting the channel at http://patreon.com/solvingthemoneyproblem so I can keep creating content for you guys.
There’s a link in the description.
But either way, the best form of support is you being here and watching, so thanks again.